Broadband Cable Association of Pennsylvania

Today, over 5 million Pennsylvania households have access to broadband cable.

NewsClips

February 21, 2014

The combination of Comcast and Time Warner Cable (TWC) has lots of pro-competitive upside and few, if any, downsides. Here's why:

- First, the transaction promises key consumer benefits. By accelerating TWC's transition to all-digital, we will bring its customers faster Internet speeds and greater programming choices, thanks to the 300,000-plus online streaming choices, 50,000 video-on-demand options and super-fast connection speeds already offered by Comcast. We will also expand the availability of Xfinity TV mobile apps and accelerate the deployment of our X1 video platform, cloud-based DVR services and other products.
- Second, consumers will face no loss of competition or choice in broadband, video or phone service because Comcast and TWC do not compete against each other anywhere.
- Third, the transaction poses no threat to the "Open Internet." Comcast has been a consistently strong and public supporter of the FCC's Open Internet rules and has lived under them for three years. We haven't had any issues or plausible claim of a violation.

Our view that the rules were appropriate is what led us to agree in the NBC Universal transaction in 2011 to agree to be bound by these rules even if the courts were to strike them down. And now that the courts have, in fact, invalidated the no-blocking and non-discrimination rules, Comcast is the only broadband Internet provider still governed by them. For those who were sorry to see the Open Internet rules struck down, there is much to cheer about here: As a result of the TWC combination, these rules will now be extended to TWC systems while the FCC decides how to proceed on any future Open Internet rules.

This commitment to extend these rules to TWC systems is important because it ensures that the FCC has sufficient runway to establish (and perhaps defend) any new rules it fashions, without having to worry about any blocking or unreasonable discrimination by Comcast or TWC in the meantime. So this transaction can only be seen as a net plus for Open Internet advocates. This transaction is pro-Open Internet, pro-consumer, pro-competition and strongly in the public interest.

Guest opinion by David Cohen, Comcast Executive Vice President, in USA Today. BCAP is proud to welcome Mr. Cohen to next month's Cable Academy as Keynote Speaker. Register now at CableAcademy.com!

DirecTV Chief Executive Mike White on Thursday voiced his opposition to Comcast Corp.'s proposed takeover of Time Warner Cable Inc., saying the deal would create "unprecedented media concentration in one company." Speaking on an earnings conference call, Mr. White singled out broadband as one service the combined cable giant would dominate, saying it could have an "effective" monopoly in as much as two-thirds of the U.S.

The cable deal, announced last week, has renewed speculation on Wall Street that DirecTV and Dish Network Corp. , the second and third-biggest pay TV providers, respectively, could seek to merge to gain scale and remain competitive. "A merged Comcast/TWC, with a large and growing cost advantage in content acquisition, will only make things harder" for DirecTV, Craig Moffett, an analyst at MoffettNathanson LLC, said in a research note Thursday. On the call, Mr. White said consolidation in the industry is the only way from a "marketplace standpoint" to impede the rise of programming costs. He said DirecTV "will continue to look at options for how we can strengthen our company for the long-term."

Dish Chairman Charlie Ergen has previously acknowledged benefits to a merger, but expressed uncertainty about whether regulators would bless a deal. The two satellite giants attempted a merger more than a decade ago that was blocked by regulators. Dish reports its fourth-quarter results Friday.

Comcast declined to comment on Mr. White's remarks. One issue confronting a possible merger of the satellite firms is that they compete with each other to sell TV services, whereas cable operators' markets don't overlap geographically. Another potential roadblock is the different strategic paths the satellite companies are taking: Dish is looking to enter the wireless business; DirecTV has eschewed wireless and sought growth in other areas, including a planned online video service.

Comcast argues that it faces stiff competition from satellite companies and phone companies in the stagnating pay-TV market. But the combined cable company would dominate the broadband market, the side of the business that is growing robustly. Satellite companies don't offer Internet access with speeds comparable to those offered by cable companies. Mr. White's remarks on the cable merger came as DirecTV reported that its profit shrank 14% in the fourth quarter as higher programming costs offset increased revenue. The company's once steadily growing Latin American segment reported a sharp slowdown in subscriber growth. The satellite TV provider added 231,000 net subscribers in Latin America, compared with 658,000 subscriber additions in the year-earlier period.

In the much-larger U.S. segment, subscriber growth slowed to 93,000 net additions from 103,000 a year earlier. The company has been focusing on acquiring upscale customers who are more likely to take additional services like digital video recorders and less likely to switch providers. DirecTV cited a "more challenging competitive environment and a mature industry" for its slowdown in U.S. subscriber additions. DirecTV has been in a monthlong fee dispute with Weather Co.'s Weather Channel, which has resulted in a blackout of the channel for DirecTV's 20 million customers. Mr. White said Thursday that DirecTV may have lost "a few thousand customers" in the first quarter related to the dispute. DirecTV reported a profit of $810 million, or $1.53 a share, down from $942 million, or $1.55 a share, in the year-earlier quarter. Revenue increased 6.7% to $8.59 billion. Total expenses jumped 7.5%, driven by a 7.9% rise in broadcast programming and other costs. Wall Street Journal

For Dish Network, it is good to have choices.

The company has been buying blocks of wireless airwaves with the aim of pivoting into a new business as growth in satellite-TV slows. So far, Dish hasn't signaled plans for the wireless spectrum-and investors shouldn't expect that to happen soon. Until it does, the potential value of those airwaves should bolster Dish's shares. Meanwhile, Dish's core business chugs along. It is expected Friday to report fourth-quarter earnings of 40 cents a share on revenue of $3.6 billion, compared with earnings of 46 cents a share on similar revenue in the same period a year earlier. For 2014, profit and subscriber growth should be solid, thanks to a recent $5-a-month price increase in its basic satellite-TV package, new DVR technology and increased promotional activity.

Barring a miss, investors will remain focused on possibilities for Dish's spectrum. Its holdings could be worth $15.8 billion, well more than half the company's current market value, Macquarie estimates. Furthermore, Dish is thought to be the leading bidder for spectrum known as the H Block being auctioned by the government. Macquarie reckons that could add a net $1.5 billion in value to Dish's holdings because it could be paired with existing spectrum, enhancing its value in a network.

Of course, selling that spectrum probably isn't Dish Chairman Charlie Ergen's top pick because it wouldn't move the company into a new business. To build a wireless network, Dish would likely need to partner with an established carrier, leasing it some spectrum in exchange for investment. One opportunity could arise if Sprint bids for T-Mobile US, which it is considering. If regulators approve a deal-and that is a big if-they may require partnerships or spectrum divestitures. Plus, AT&T and Verizon Communications will likely need more spectrum for their next-generation networks.

A final option: merge with rival DirecTV. This wouldn't be a new business, but would bring significant synergies. Comcast's deal to buy Time Warner Cable is a complicating factor. It could pave the way with regulators for further industry consolidation. Or it may make them more hostile to a satellite combination, notes MoffettNathanson. Eventually, Mr. Ergen will have to choose a partner. But, with the wireless and pay-TV industries in flux, Dish doesn't have to rush onto the dance floor. Wall Street Journal; see Dish's 4thQtr earnings from Reuters

Charter Communications Inc. swung to a fourth-quarter profit as the cable operator boosted revenue following its $1.6 billion acquisition of Bresnan Broadband Holdings LLC. The quarterly report comes about a week after Comcast Corp. unveiled its $45 billion deal for Time Warner Cable Inc., which would combine the two largest cable operators. The proposed agreement almost certainly ends an eight-month takeover battle for TWC by Charter, the fourth-largest cable operator, and its biggest shareholder, Liberty Media Corp.

Charter's pursuit of TWC, which began after Liberty bought a 27% stake in Charter about a year ago, had raised the possibility that Liberty Chairman John Malone would emerge as a rival to Comcast CEO Brian Roberts. Mr. Malone, a cable pioneer, once led the U.S. cable industry but sold his previous cable firm, Tele-Communications Inc., to AT&T in 1999. For its latest period, Charter said its rate of residential video-subscriber losses continued to slow: The company lost 2,000 customers in the fourth quarter compared with losses of 36,000 a year earlier when adjusting for the Bresnan acquisition. The company attributed the improving trend to more competitive video products including more HD channels, packaging of advanced services and new selling methods. Internet customer net additions were 93,000, improved from 59,000 a year earlier. Voice additions were 56,000, up from 34,000.

Verizon has completed an approximately $130 billion deal to take over all of Verizon Wireless. New York-based Verizon Communications Inc. has said that buying Vodafone's stake would give it greater flexibility to invest in new technologies. It acquired the 45 percent stake in its wireless division from Vodafone Group PLC, issuing about 1.27 billion shares of common stock to the British cellphone carrier's shareholders. Both companies' shareholders approved the transaction last month. Verizon's stock fell 23 cents to $47.89 in Friday morning trading. Associated Press

Pennsylvania utility regulators are looking into complaints about spiking electric bills, saying the affected people had signed variable-rate contracts with suppliers that then passed on wholesale prices driven up by cold weather. The state Public Utility Commission has voted unanimously to review the policies and rules around what regulators call electric generation suppliers that buy and sell electricity. The PUC doesn't regulate their rates, but it does regulate their conduct and marketing practices. It says it's received more than 750 informal complaints from consumers about high bills. The complaints are arriving as policymakers in Harrisburg consider legislation that would bring more business to the suppliers by auctioning off the accounts of millions of Pennsylvania households that are still served by traditional utilities. The AARP opposes the bill. Associated Press